Consumers have missed the boat for capped energy prices

19 August 2008 / by Rachael Stiles

Many British consumers have lost the race to secure cheaper energy deals before the price hikes which have taken hold in recent weeks, with more than half failing to secure a capped energy tariff in time.

Research from Fool.co.uk has found that 54 per cent of British householders weren't quick enough to beat rate rises to the post and apply for a capped energy tariff, although thousands were successful in thwarting the encroaching cost of energy.

Major energy providers, such as British Gas, EDF, and Scottish Power, announced severe increase in their rates this month, causing panic amongst many as they scrambled for the cheapest tariffs available before the hikes were implemented.

While more than half of Brits missed the capping boat, almost a quarter were able to secure themselves a capped rate that will provide some relief as the cost of living soars with rising food prices and mortgage rates.

And even though a capped energy tariff means security from further price rises in the near future, there is no certainty about how much gas and electricity will cost after these deals come to an end.

Some Brits were unflustered by the panic surrounding the energy industry, as capped deals are not always the cheapest option in the short term, encouraging 23 per cent of UK households to take their chances with cheaper alternatives, sacrificing security for cost.

As the industry has become more complicated with the recent rush to cap, consumers have three distinct options, says Laura Starkey, finance expert at Fool.co.uk.

"Those customers who didn't manage to cap their tariff may feel like they've missed the boat, and rises are predicted again in December. However, now the dust has settled on the latest round of tariff announcements a more complex situation has emerged." she said.

"Consumers are faced with three choices. First, they wait and see. But this could be at the risk of missing the last of the good deals. Second, they take a capped tariff now, and feel the security of knowing their outgoings, albeit at higher prices than before. Or thirdly, they get ready to start switching. Finding a new tariff after each price hike may be the best way to keep on top of rising prices by applying a little regular legwork.

Ms Starkey reminds worried households that having a capped tariff is not the "the be-all and end-all," but merely a form of cost control. She added: "Even at the lower rates it might not represent a saving for some.

"Remember the golden rule: as long as a cap is no more than 15%-20% more expensive than your current tariff, it's probably worth going for. A cap isn't supposed to cut your bill right now -- it's intended to prevent it rising in future. If you're looking for a quick fix or a deal that doesn't pass on wholesale price explosions, sad to say, but that ship has sailed."